Good morning. It is Monday, November 10th, 2025.
We're here for the 830 docket and case number
25 -90160. Sonoba Energy International. We'll
go ahead and take appearances of counsel. Good
morning, Your Honor. Can you hear me all right?
I can hear you, sir. Thank you. Good morning,
Your Honor. John Lozano with Bracewell LLP on
behalf of the debtors. I'm joined today by my
colleague Jason Cohen and by my co -counselor
Kirkland Nellis, Brian Shards, Margaret Rainey,
Mike Koch, and Gavin Treiber. All right, thank
you. All right, who else wishes to make an appearance?
Go ahead. Good morning. Can you hear me, Your
Honor? I can hear you, yes, sir. Good morning.
Henry Cabane with Pachowski, Stang, Zeeland,
Jones for Windmar PV Energy and Windmar Home
Florida, a dealer in Puerto Rico and Florida.
Thank you. Good morning, Your Honor. Andrew Jimenez
for the United States. Mr. Kalani, I could not
hear you. Still can't hear you. Good morning,
Your Honor. Sorry, good morning, Your Honor.
I do a possessor for It Road, Incorporated. I've
got it in there. Yes, good morning. Good morning,
Your Honor. Daniel Tavol from Cobra and Kim.
I'm here with my colleague, Martiz Wanderay.
We represent Special Committee of the Board of
Directors of Cinella Energy International. Good
morning. Good morning, Your Honor. Aaron Kalodny
from White and Case LLP on behalf of the Atlas
Lenders. Hopefully the better. Good morning.
I can hear you. I can hear you. Let me just go
around. Go ahead. Good morning, Your Honor. Dennis
Jenkins, Wilkie Farr Gallagher on behalf of the
committee. All right. Good morning, Your Honor.
Eric Doucher from North Gris. Bullbright on behalf
of Sunstrong Management. Good morning. All right.
Anyone else wish to make an appearance? Okay.
All right. Mr. O'Donnell is going to take the
lead. Morning, Your Honor. Again, for the record,
John Lozano on behalf of the debtors. Mr. Sharps
and his team will take the lead for us, but I'll
hand that off in a moment. First, I just wanted
to take an opportunity to thank the gentleman
for working with us on scheduling. As always,
we appreciate the court. Mr. Law is working with
us, and we believe we used the time rescheduling
this hand very productively. So without further
comment from me, Your Honor, I'll hand it off
to Mr. Sharps. All right. Thank you, sir. Morning,
Your Honor. Brian Sharps. Kirkland Ellis, Council
of Debtors, please let me know if you can't hear
me. Okay, it's okay. I'm going to make a brief
statement sort of in the form of an opening before
we dive into the agenda. I do want to talk a
little bit about what we've been doing since
we saw you on the plan about eight weeks ago.
We have a short presentation. I believe the presenter
name on the photo meeting is Kirkland Ellis,
New York. If you could make him a presenter,
we can put that up on the screen very quickly.
All right, I'm going to go ahead and activate
the hand -wrenching feature because we're getting
a lot of background noise. So hit five stars
one time if you wish to speak. Okay, can you
hear me, Judge? Again, again. Thank you so much.
I think we could just go to this next slide here.
Look, so after several adjournments of this hearing,
for which we do thank, Your Honor, for the court,
for the flexibility and patience, especially
in the midst of the government shutdown, that
hopefully will end soon, we're here today to
seek final approval of that or disclosure statement,
which the court conditionally approved on September
12th, and confirmation of the plan. And Judge,
I'm pleased to report... that we have used the
time productively. And I believe, knock on wood,
that other than with respect to the arguments
that the U .S. Trustee's office previewed at
the conditional DS hearing, I think we're consensually
resolved on both the plan and disclosure statement.
Hopefully I don't meet that pronouncement, but
I think we're in very good shape. I want to talk
for a moment about how we got here. And I think
every good confirmation presentation starts with
a timeline. Um, so that's what you have in front
of you. Um, your honor, this has not been an
easy process. Um, sorry, someone's calling me.
This has not been easy process. We started this
chapter of the cases on what I called at the
time, odd footing. That was at our first, uh,
day of our three day long first day hearing way
back in early June. Don't think too hard about
that one. Um, and we had started the cases by
filing a voluntary petition for the subsidiary
debtor to know the tech developer. Really, without
any sort of press release, our first day papers,
we did that filing to help preserve potentially
valuable preference claims, but it was inauspicious
beginning to be sure. Now, a week later, we filed
the other three debtors along with some first
day papers, but our work wasn't done. When we
ultimately had our first day hearing, the debtors
did not yet have a dip or a stocking horse did.
Instead, the debtors had about $13 .5 million
of cash on hand, that was not cash collateral,
and two private sale motions to sell certain
non -core assets for about $15 million each.
That was progress, to be sure, but to put the
situation in context, we had a company with nearly
$9 billion of debt, funded debt, across the debtors
and the non -debtors in the structure, and we
had very little cash. I'll tell you now, it was
dire. But we collectively put on a spray face.
And I told you, Your Honor, at the first hearing
that there would be no flashy first day presentation
decks. Instead, we were going to take these cases
and bite -sized pieces to do the best we can
under the circumstances. That first hearing,
Judge, was a long one, one I won't soon forget.
You heard the evidence on one of the sale motions.
And I think, if I'm reading the room correctly,
somewhat reluctantly approved that first sale,
understanding the situation was very neat and
we needed the cash. But at the risk of being
dramatic, that decision really set the stage
for us to start to right -size the situation
and move the debtors from odd footing to something
much better. And as we moved from left to right
on this timeline, things did start to come into
place and we did continue to take them. in bite
-sized pieces. So during the course of the rest
of that week in June, the debtors were able to
reach agreement on a dip from a group of bondholders.
It also included a credit bid that supported
sale process as a stocking horse. That dip reflected
very important concessions from the dip lenders,
including an agreement that the sale process
would be on a rational 45 -day timeline. and
that the dip collateral would exclude a pocket
of valuable unencumbered assets that we refer
to as the new home whip. We also reached the
first of what became several agreements with
Atlas, working with Mr. Kladney. He was the agent
of the warehouse facility at the non -debtor
entity Tepp Holdings and its subsidiaries. That
was another very important step in these cases
because that created a path forward to potentially
and now actually unlock huge recoveries for the
dealers who are owed several hundred million
dollars. So I took a bit of a flyer at the end
of our first day, third day of the first day
hearing in June. And I said some optimistically
that, you know, the company was on firm footing
and the professionals all went home after that
week. We had a good night's sleep and we immediately
got back to work. There was so much to do and
we've been really busy ever since. A few of the
major items we've accomplished along the way
during the intervening months. So following the
appointment of the committee on June 18th, we
immediately jumped into a dialogue with them
about the terms of the final dip order. And as
you all will remember, the final dip order had
as a condition to it a release by the debtors
of KKR that was needed as part of the stocking
horse bid for a whole host of reasons, including
tax reasons. we were able to achieve entry of
the final DIP order on a consensual basis with
the committee. And I think that was, looking
back at it, I think it was a huge milestone and
a point of optimism, at least for me, because
it showed that the parties and cases had the
will and the drive to be commercial and thoughtful
and not spend unnecessary money on legal fees,
fighting about things that we can resolve consensually.
Again, after that order was entered, That set
us up to have the auction for the sale which
we did have. The auction began on July 23rd and
the sale order was entered on July 31st. The
sale ultimately closed on September 3rd following
a very difficult process for approval by holders
of several billion dollars of ABS debt within
the asset co -structure that was being sold.
The stocking horse purchaser did end up buying
the assets, but only after the auction process
resulted in a material increase in the value
of the transaction of just under 20 million bucks.
Again, we achieved agreement with the committee
on the terms of the sale order. We ultimately
saved approximately 400 jobs and continued service
for 400 ,000 customers approximately. We could
just jump down to the next slide, please. In
fact, Your Honor, since the petition date We
have executed on more than six transactions with
various counterparties that have resulted in
significant cash proceeds to the debtor. The
specter of administrative solvency that perhaps
has hung over these cases for at least some of
the process, we can say today with confidence
that the debtors are administratively solvent.
And all told, since the initial petition was
filed, over $100 million of incremental value
has been negotiated and are monetized through
the hard work of the debtor's management team,
the purchaser slash gift lenders, Atlas, the
UCC, their collector advisors, and I would be
remiss if I didn't call especially Mr. Alejandro,
the debtor's CRO, who has worked relentlessly
tirelessly to maximize the value for these states.
Judge, this is all stuff you've been sort of
privy to. Quick summation of how we got here.
I want to talk a little bit about what has happened
since your honor conditionally approved the disclosure
statement on September 12th. More than eight
weeks ago, I'm almost embarrassed to say. I'm
sure you've wondered a little bit what's going
on behind the scenes, and I want to give you
a little bit of a peek of how we've used that
time. Let's start with the committee judge, represented
by the advisors of Wilkie and Blank Rahm and
BRG. You may remember, Your Honor, at the conditional
disclosure statement we heard a bit from Mr.
Jenkins and Wilking that half the committee has
said, and I'm paraphrasing here, that the committee
was not happy and that there is a lot that needed
to be done if we were ever going to have a consensual
confirmation even once a farce to say that Your
Honor should expect objections, discovery spikes,
and depositions. It was a shot across the bow
to be sure. Now I have a lot of professional
respect for Mr. Jenkins, so it was a hard speech
to hear that day. We had come so far in these
cases, but it was clear that we had so much that
we had to do to finish these cases efficiently
and effectively. We on the debtor side took Mr.
Jenkins' comments and shot across the bow, not
as a declaration of war, but rather an invitation
to see if we can work that much harder to find
peace, and that's what we did for the last eight
weeks. Your Honor probably always hears the phrase
hard fought negotiations all the time. Everyone
throws it out in all the papers. Let me tell
you, that phrase is an understatement here when
it comes to the plan that we are seeking to confirm
today. Finding a way to peace and resolution
required every party to stick with it and not
let discussions become overly emotional or descend
into chaos and the level of professionalism that
parties carried out here is very extraordinary,
and we thank everyone for participating in it
the way they did. I frankly wasn't sure at times
that we would get there, especially on very difficult
questions about the appropriateness of things
like releases and the formation of the credit
trust and what would go in the trust, but we
did. It took us eight weeks. Frankly, it took
us more than eight weeks because we started before
the DS, but we did it. And I applaud everyone
for sticking with it, not just with Kirkland
and Ellis, and working with A &M and Kirkland,
but working with the advisors at Cobra and Kin
and Providence, who represent the Special Committee
of Two Interested Directors, Mr. Tony Horton
and Mr. Jeff Stein. I believe that there is a
world where lesser professionals would have spent
a lot of unnecessary time and money in these
cases on litigation, and that credit or credit
recoveries would have been... all the worse for
it. That's not where we're at. We're here on
a largely consensual basis, not fully consensual
basis other than with the U .S. trustee, and
people have worked really hard to get there since
September 12th. I also want to talk a little
bit, Your Honor, about the purchaser under the
whole cost sale, who works with Paul Weiss, Norton
Rosen, Evercourt. As I mentioned, we came to
these cases with a very complex, large capital
structure, and doing a sale around that structure
was not easy, very complicated. We all were moving
very quickly, and while we did our collective
best to dot every I and cross every T with respect
to the Hoco sale, it probably was inevitable
that at some point there would be a dispute about
the sale once the sale closed. That's exactly
what happened, and Your Honor has seen this time
and time again. I'm sure the dispute was pretty
simple. The purchaser had a view about what the
debtors owed it, and the debtors had a view about
what the purchaser owed them, and they weren't
the same. It's a story you've probably heard
a lot. That dispute itself could have devolved
into, frankly, complete chaos, resulting in motion
practice, discovery, and at least one adversary
proceeding was threatened. But again, all of
the principles and professionals approached the
dispute in a patient and rational manner, and
that resulted in a comprehensive resolution that
is now built into the plan and which will bring
in an incremental 8. $8 ,376 ,000 into the debtors
of state. So it's a net positive to the debtors
without having to spend incremental professional
fees getting to the right answer. So we think
the professionals and the principals involved
for getting to the right answer there. And we'll
talk a little bit more about that as we get into
the plan, but that's a second area that's been
hotly contested. The third vertical judge is
within Atlas. the non -debtor entities that are
obligated on the warehouse facility. You've heard
a little bit from Alice's counsel, from my case
throughout the cases, and their financial advisor
from Alex's partners, also leading the team,
the charge of the team from McDermott, Will and
Sholte, that you haven't heard from as much,
but has been extremely helpful that represents
the board at the non -debtor entity TEP Holdings.
It is a very complicated relationship between
the debtors and the non -debtors, but the punchline
here is that the various sale and settlement
agreements that we've reached with TEP -H, TEP
Holdings, TEP -H, which is what we call it, ultimately
unlocked hundreds of millions of dollars for
over 100 dealer settlements and a path to a significant
recovery for the TEP -H warehouse lenders. We've
also had a very consensual governance process
within TEP -H with Ms. Nanoukian's help. Achieving
peaceful resolution on the plan also required
that we find agreement with those professionals
because they had their own comments on the plan,
too. So we had to bring them into the fold and
make sure they were comfortable with what we
were doing. Of course, there have been one -off
issues, some of which are very important, like
the issues with the Department of Energy, that
we've been able to address over the course of
the last eight weeks and which are reflected
in the plan and proposed order. But it's been
a very busy stretch, Your Honor. I apologize
for not having given an update on where we are.
But frankly, we weren't sure it was going to
come together. But it did. And you now have a
sense of what we've been up to. It's been a long,
hard road. But I strongly believe that we, the
royal we on this call, folks, have really done
all we could have done to maximize the value
of the debtors of states. And I say that with
the most confidence I've ever had since I've
been working on these cases, that the company
is not just on firm footing at this point, but
the plan that we're going to ask Your Honor to
confirm today will put the debtors on the absolute
best footing they could have been on, especially
in light of the circumstances that led to the
cases. So with that, Your Honor, I'm happy to
answer any questions you may have or otherwise.
see the podium to any other party that wishes
to make a statement. Once that's done, we're
going to move to our evidence and presentation
in support of the disclosure statement that's
going to be led by Miss Rainey with support from
our colleague, Mr. Mike Cuddle. All right. Does
anyone wish to make, thank you, Mr. Sheriff.
Does anyone wish to make brief remarks by way
of opening? Go ahead, Mr. Jenkins. I don't think
you have to hit five star. Anyone who wishes
to hit five star, I still haven't seen you, Mr.
Jenkins. No, just pick five star one time. Conference
un -muted. Let me mute this and then hit five
stars. Conference un -muted. Just go ahead and
Mr. Jenkins will un -mute it after you speak.
Yeah, I'm sorry. I said my hand was raised. I
apologize. Not sure what I'm doing wrong here.
But I want to thank Mr. Schartz for his preview
and also just give you a quick update on where
the committee is. As Mr. Schartz pointed out,
there was real risk of administrative insolvency
here. And as a committee, we wanted to be very
sure that we took the right approach to maximizing
value and which took a careful balance constantly
to make sure that we were making the right decision,
both from how fees would be spent in this case
and how we would ultimately maximize value. And
as Mr. Sharps pointed out, this case started
out with a number of emergency hearings and eventually
the sale of substantially all the assets. And
it became clear through time that really the
only value for general unsecured creditors would
come down to causes of action. And as Mr. Sharpe
pointed out, through really hard -fought negotiations,
we did come to a place on the plan that turns
over that value to the general unsecured creditors,
both in terms of the ability to control that
destiny and how that pursuit occurs. And as I'm
sure will be pointed out, That plan now provides
a liquidating trust. The general unsecured creditors
through the UCC have selected a trustee who will
oversee that trust. And there's an oversight
board with four general unsecured creditors selected
by the UCC who will now take over the reins,
so to speak, of maximizing the value of those
remaining assets. Equally important is that This
plan and the disclosure statement now projects
that we will have sufficient money not only to
wind down the debtor estates, but also fund the
start of the pursuit of those causes of action,
both in terms of investigation and where necessary
litigation. And I want to point out also that
through the creditor trust agreement, while we
think we may have enough money to start that
process, it's your honor knows not always clear
at the beginning where that may go. But the creditor
trust agreement that we've agreed upon and that's
in the plan supplement will also get the creditor
trustee with the consent of the oversight board,
the ability to obtain litigation financing if
needed, which could include loans, contingency
arrangements, and insurance. So we will have
the resources, general insecure creditors will
have the resources to pursue those causes of
action one way or another. came in part as well,
as Mr. Schartz pointed out, fighting to limit
the scope of the releases, which took, you know,
a lot of effort. But we got comfortable, one,
as you would expect, that there's no release
of fraud, gross negligence, and willful misconduct.
But further, we've now retained avoidance actions
and causes of action against virtually all the
pre -petitions. officers, directors, advisors,
third parties with only very minor exceptions
so that the full scope of what happened here
can be investigated and pursued and, if necessary,
litigated to maximize value. And that includes
also through the retention of insurance policies.
So a lot of work went into making sure that this
liquidating trust would have access to pursue
causes of action standing to pursue those and
also reach to insurance. And lastly, I would
say we also work to make sure for third party
releases that there will be an extension of time
for creditors out there who didn't yet have the
chance to opt out. They will have, I believe,
to December 10th an additional notice time to
opt out of those releases. So there will be additional
time and additional notice for those creditors
to take a look at that and opt out. So in the
end, Your Honor, while I can't say we've made
lemonade out of lemons here, at least the lemons
are being turned over to a trust and we'll be
able to pursue the remaining causes of action.
in a way that makes sense from the committee's
standpoint and hopefully from the general and
all general and secured creditors. And I will
just add that it did take a lot of work with
a lot of professionals focusing on being professional,
focused on pushing and fighting where necessary,
but not fighting where it was unnecessary. And
I thank everyone for their work on that and for
your attention to this, Judge. Thank you. Does
anyone else wish to be heard by way and make
sure of an opening statement? All right, Mr.
Sharps. OK, I'm actually going to take it to
Miss Rainey in New York, who's going to present
the case in chief. So Miss Rainey, take it away.
Good morning, Your Honor. Can you hear me? I
can hear you. OK, great. Margaret Rainey of Kirkland
& Ellis, Council for the Debtors. As Mr. Schartz
mentioned, we're thrilled to be here today seeking
final approval of the disclosure statement and
confirmation of the plan. At the outset, I would
like to start with a summary of the evidence
in support of confirmation today and the omission
of the documents embodying the evidence. Your
Honor, we submitted and filed with the court
a number of declarations in support of confirmation.
The first, is that of the chief restructuring
officer, Mr. Ryan Omohundro, filed at docket
number 1179. Mr. Omohundro's declaration addresses
the 1129 factors, as well as evidence in support
of the releases. The second declaration is that
of Mr. Jeffrey Stein, a disinterested director
on the debtor's board, having served since April
of this year. His declaration is at docket number
1180. and addresses the special committee of
the board's investigation. Finally, we have the
declaration of Mr. Alex Orchowsky from Kroll,
the debtor's commission noticing agent. That
was filed at docket number 1182 and outlines
the voting and solicitation process. Your Honor,
all of these declarants are present via Zoom
today, and I would ask that the outset of these
declarations be admitted as the declarant's direct
testimony and support confirmation. All right,
let's take them one at a time. So with respect
to Mr. Alejandro's declaration at docket number
1179, does anyone oppose the admission of Mr.
Alejandro's declaration as his direct testimony
in connection with this case subject to cross
-examination? All right, hearing no objection,
they will be admitted. I do have one question.
So Mr. Alejandro, would you raise your right
hand, please? Do you solemnly swear or affirm
to tell the truth, the whole truth and nothing
but the truth? I do. All right. My only question
is, your declaration had a conversion date of
October 17th. We're almost a month later. With
respect to the liquidation analysis, would your
testimony be the same as the conversion date
for today as opposed to October 17th? It would.
All right. I have nothing further. Has anyone
wished to cross -examine? I'm sorry. Thank you,
Mr. Alejandro. Your declaration was admitted.
Next is the declaration of Mr. Stein as docket
number 1180. Does anyone object to the admission
of the declaration of Mr. Stein as his direct
testimony for purposes of this hearing subject
to cross -examination? I hear no objection. That
will be admitted. And finally, we have the declaration
of Mr. Oshosky at docket number 1182. Does anyone
object to the admission of the declaration of
Mr. Oshosky as his direct testimony in connection
with this hearing subject to policy examination?
Okay, here no objection. His declaration at docket
1182 will be admitted. Go ahead, Ms. Ray. Great,
thank you. Thank you, Your Honor. Your Honor...
The debtors assert that the disclosure statement
contains adequate information as presented in
the confirmation brief and no party has asserted
otherwise. The debtors have complied with the
applicable solicitation requirements set place
in the conditional disclosure statement order
and required under Section 1125 of the bankruptcy
code. Kroll, the debtor's claims and noticing
agent, sent out approximately 8 ,000 solicitation
packages to the voting classes. and approximately
37 ,500 non -voting notices to other claimholders.
Further, the debtors submit that all parties
were provided ample notice to return such materials.
When there was a question as to whether the debtors
had met the required voting threshold, the debtors
extended voting deadlines for classes three and
five and utilized the flexibility afforded by
the solicitation procedures. to allow parties
to change their votes as necessary to achieve
the consensus reflected in the voting report.
Your Honor, we believe that the process worked
as it should have, in no small part due to Your
Honor's approval of the conditional disclosure
statement order and the efforts of CROHL. Accordingly,
unless Your Honor has any questions regarding
the disclosure statement, the debtors respectfully
request that the court approve the disclosure
statement on a final basis at the conclusion
of the hearing. All right, let me just let's
take that piece right now. Does anyone wish to
be heard with respect to the final approval of
the disclosure statement? All right, thank you.
Yes, I'm sorry, Your Honor. Andrew Heman for
the United States. I guess my only remark will
be also in connection with confirmation of the
plan. as the U .S. trustee objected earlier in
this case, Your Honor, to the opt -out mechanism
with the understanding that the opt -out mechanism
was not appropriate in this case because you
don't get the appropriate consent from creditors.
So in that respect, which connects to confirmation
of the plan, I just want to raise that issue,
Your Honor, so that it's not... forgotten or
considered as waiving that right as it relates
to the disclosure statement, but I think it's
more, it fits more appropriately with confirmation
of the plan. All right. All right. Thank you.
That'll be noted. All right. Go ahead, Ms. Rainey.
Thank you, Your Honor. Next is the plan. I will
spare the court a lengthy recitation and discussion
of each of the 1129 factors. none of which I
believe are in dispute today. I would just note
that these factors are addressed in detail in
Mr. O'Mahondra's declaration and in our confirmation
brief. I will focus my presentation on the revisions
that we have made to the plan since solicitation
and the objection. As Your Honor saw, we made
a number of revisions to the plan, all of which
we believe are technical modifications that do
not give rise to re -solicitation. My colleague,
Mike Ko, will walk your honor through the confirmation
order in detail, but at a high level, we made
the following changes. We disclosed the identity
of the creditor trustee and the initial members
of the creditor trust oversight board. We made
several changes to clarify that causes of action
vesting in the creditor trust will not include
any released claims. We added the purchaser settlement
which as Mr. Schartz noted, brings an incremental
$8 .376 million into the debtor's estate. We
clarified the scope of the debtor release and
third party release, as well as the definitions
as the release and releasing parties. Your Honor,
as Mr. Schartz mentioned, these changes were
heavily negotiated with the committee, advisors
to the special committee, the DIP ad hoc group,
and several other of the debtor's stakeholders.
and was scrutinized very closely given that this
is a liquidating plan and there will be no discharge
in these cases. The definitions of released and
releasing parties as revised are narrowly tailored
to capture those who contributed significant
value to the debtors of state in these Chapter
11 cases and the scope of released parties was
informed by and is consistent with the results
of the independent special committee investigation.
I have a question there though. I believe, if
I read correctly, that the debtor is a released
party. I don't understand how the debtor can
be a released party. Your Honor, the debtor is
a released party in that we took the temporal
limitation that Your Honor noted at the disclosure
statement hearing, and it's only being released
for the period between the petition date and
the effective date. If that's the case I missed
it but what where is that in the plan? Your honor
I'm looking at Article 8 of the plan, Section
C. So, towards the bottom of that paragraph,
it notes the confirmation order shall only release
claims and causes of action against the debtors
and their related parties solely to the extent
the claims arise from the period between the
petition date and ending on the effective date.
There is a limited carve -out there for the release
directors and officers and the debtors professional.
We took Your Honor's comments at the conditional
disclosure statement and added that limited carve
-out solely for protection of those parties,
but that was the only change we made with respect
to Your Honor's ruling at the disclosure statement.
Okay, which paragraph is it in? Because when
I read the, sorry, oh, I see, okay. Okay, all
right. I missed that, sorry. Yeah, I missed that.
Go ahead. Thank you, Your Honor. Your Honor,
you'll also see in this paragraph and in the
releases generally, that there is a new defined
term called specified releasing parties. Those
parties, through negotiations with the debtors
and the committee, agreed to release the debtors
and their related parties for the pre -petition
period as part of the settlement of plan issues
that set the table today for the consensual hearing.
These specified releasing parties also agreed
that they will not offensively seek recovery
against the debtor's D &O policies except and
except for one lender group, they will not pursue
preposition claims against the debtors. Again,
Your Honor, this was one piece of the broader
settlement that enabled the parties to come before
Your Honor with a consensual plan. And from the
debtor's perspective, the releases in the plan
are appropriate and consensual, consistent with
the circuit law. Your Honor, in a similar vein,
You likely saw the schedule of non -released
parties that was included in the plan's supplement.
This is a rather novel concept in form and not
really in substance. Given that this is a liquidating
plan and the creditor trustee will be looking
into claims against non -released parties for
the benefit of its beneficiaries, we decided
to create a report noting the parties that were
explicitly not released. To be clear, we're not
saying that the parties on that schedule have
claims that are being served, but rather that
these parties are expressing not being released
by the plan. And if there is a credible claim
against them or their respective related parties,
then the plan doesn't bar an action against those
parties. As to the debtors' objections, we received
19 formal objections. and a number of informal
objections or language in the plan or confirmation
order. We have worked with each of the parties
that submitted either formal or informal objections,
and many of the comments have been reflected
in the documents filed with the court to that
effect. There are a few general categories of
objections outstanding. The first are a series
of pro se objectors. We received nine formal
objections and one informal objection to confirmation,
among other outreach not really related to confirmation
from various pro se parties, largely alleging
servicing, installation, or billing disputes.
Given that the debtors have sold substantially
all of the estate to Solaris, the debtors have
worked to connect each of these pro se objectors
with appropriate personnel at Sunstrong which
has taken over the management of the customer
systems and contracts. I will note to the extent
that these objects thought to opt out of the
plan's releases, we also coordinated a crawl
to ensure that they were reflected in the opt
-out tabulation. We don't believe that any of
these objections raise a colorable confirmation
issue or directly implicate the 1129 factors.
Your Honor, the second category of objectors
are those of the dealers associated with the
DOE Puerto Rico Resilience Fund. As Your Honor
likely remembers from the first day hearing,
we have thought from the beginning to ensure
that these dealers continue to receive reimbursements
under the DOE Fund. We have been negotiating
final payments for these dealers and the termination
of that program with counsel for the DOE directly.
The dealers that operate within that program
filed objections to confirmation. We have included
language in the confirmation order noting the
proposed resolution for this program and reserving
parties' rights, and in any event, do not believe
that those arguments relate to confirmation of
the plan. That leaves us with the U .S. Trustee's
objection, which largely focuses on the plan's
third -party release, which I will focus the
rest of my presentation on. Your Honor, to start
with the debtor release, no party has specifically
objected to it, but I think that the context
supporting that release is really important here.
The special committee of the board is comprised
of two decision -set directors and was formed
in April of this year. The special committee
and those directors and advisors reviewed potential
estate costs of action and claims and conducted
a thorough investigation into those claims that
the debtors may hold. As noted in the signed
declaration, the special committee advisors reviewed
approximately 20 ,000 responsive documents, conducted
or participated in 38 interviews, and reviewed
extensive financial information, ultimately culminating
in a 100 -page report that was presented to both
the committee and the DIP ad hoc group. The special
committee ultimately determined that the scope
of the debtor release is appropriate. For these
reasons, we believe that the debtor release is
a reasonable exercise of the special committee's
business judgment, especially when viewed as
a piece of the comprehensive whole. Your Honor,
as to the third party release, I have two observations
generally. First, all of the releasing parties
were given the opportunity to opt out of the
releases. Given the receipt of 543 opt -outs,
I would say that that opt -out process was successful.
As this court noted at the container store hearing,
the major goal and major inquiry that the court
has to make is Was this a process that was fair
and intended to get notice to people so that
they can make a decision? And I think the answer
to that question here is emphatically yes. All
parties were at least provided the opportunity
to opt out in that notice, which was approved
by this court at the conditional disclosure statement
hearing and drafted with the input of the various
stakeholders. Crowell did an incredible job of
seeking to locate and curb all state voters to
ensure that parties were afforded the opportunity
to opt out. Further, given the multiple adjournments
of the confirmation hearing, we continue to accept
opt -outs even past the deadline. It is very
difficult to argue based on the evidence in the
voting report that the debtors did not adequately
provide notice with respect to the opt -out process.
In our view, this process worked exactly as it
was intended, and the opt -out are an indication
of such. Moreover, as previously noted, the debtors
granted several extensions of the voting deadline
with respect to classes three and five in pursuit
of a consensual plan. Through that process, we
were alerted that there were some issues that
certain holders were having. and opting out and
simultaneously accepting the plan. We worked
with the committee advisors and their clients
to ensure that any party that notified us of
the desired opt -out was relayed to the poll
and recorded on the opt -out notice. I'm sorry,
opt -out tabulation. However, as an added measure,
the debtors determined it would be prudent to
extend that opt -out deadline and send a supplemental
opt -out form to parties in the voting classes,
that's classes 3, 4, and 5, to ensure that they
have the opportunity to opt out. We have proposed
30 days from today as the extended opt -out deadline
subject to Your Honor's approval. Second, as
Your Honor noted, since specific lumber, no non
-consensual third -party releases have been approved
in the Fifth Circuit. Instead, they're refined
ways to determine whether releases are consensual,
and that is through notice and opt -out. The
Supreme Court was clear and prudent, noting that
nothing in that opinion should call into question
consensual third -party releases, and the debtors
agree with that assertion. The debtors believe
that the uncontroverted evidence presented by
Mr. Orchowski, including the number of affidavits
of service and extensive noticing efforts, show
that this process worked, and parties were effectively
given the opportunity to opt out of these releases.
We believe that the debtor's process and the
releases are in line with those approved post
-Purdue, including Vroom, Robert Shaw, Independence,
Drilling, and Plenty, just to name a few. The
debtors submit that the thorough pre -confirmation
opt -out process especially as enhanced with
the post -confirmation supplemental process,
goes above and beyond the bare minimum, and has
truly achieved a consensual opt -out third -party
release. Finally, the U .S. Trustee takes issue
with the exculpated parties definition, the injunction
provision, and the waiver of the 14 -day stay.
As to the former, Both the exculpation provision
and the 1125E exculpated parties definition are
narrowly tailored to include parties that were
actively involved in these Chapter 11 cases.
As noted earlier with respect to the debtor relief,
the special committee has been extremely instrumental
in these cases. Not only did they conduct the
investigation, but as noted in the first day
declaration, they were delegated broad authority
to analyze and consider any transaction and conflict
matter. At times for these cases, they were consulted
multiple times a week, and given that management
resigned at the close of sale on September 3rd,
the Special Committee and the CRO, Mr. O'Mahondro,
have been acting as the cherries for the betters
for the estate. We believe that the exculpated
party's provisions are consistent with other
cases of curbing of the district post -Highland,
such as desktop metal, global clean energy, and
instant brands, among others. The injunction
provisions, including the post -affected date
litigation injunctions, here are also consistent
with Highland 1 and Highland 2. The injunction
provision is a standard injunction preventing
parties subject to consensual releases from pursuing
release claims, and it's necessary to enforce
those releases. The post effective date litigation
injunctions are narrow additional enforcement
mechanisms specifically to protect if state causes
of action that vest in the creditor trust and
to enforce the exculpation in favor of the exculpated
parties. With respect to the 14th day of effectiveness,
it is no secret, and Mr. Schartz noted, that
these cases have been concerned with liquidity
since the petition date. The debtors are conscious
that every minute spent by the debtors' professionals
and all other professionals takes money away
from the beneficiaries of the credit or trust,
and the debtors would assert the cause exists
to justify the 14 -day stay waiver. With that,
I would conclude my argument as to the case in
chief and reserve time for any responses, Your
Honor. Other than Mr. Jimenez, does anyone else
wish to be heard in opposition to confirmation?
Yes, go ahead, Mr. Esselstyn. Can you hear me
now? I can. Good morning, Your Honor. My name
is your teacher, Mr. Esselstyn. Okay, a moment.
I have two contracts, one energized and one unenergized.
I call a supplemental motion to inform the self
-order and section 365B. May I be here briefly
on narrow interim release, please? Go ahead.
Thank you. Respectfully, three business day identifications
to the assigned needs servicer and an authorized
signatory for my line. The status quo. no activation
of the unenergized line, and no adverse credit
or collection on the sealed amounts. Three seven
-day minimum data, monthly billing, AC reduction
consumption, and four quality logs with sure
status. If that is content, the purchaser controlled
it. Please order doctors to cost those items
to retain timeframe. All right, thank you. I'm
going to go ahead and mute again because we're
still getting a lot of background noise. Conference
unmuted. Okay, I don't know. We're having some
problems here. Okay, thank you, Mr. Sosa. I'll
just have it up. All right, Mr. Ortega? Yes,
sir. Can you hear me, sir? Yes, I can. Wait a
minute. My name is Daniel Ortega. I'm close to
a creditor with frame number 1473. I'm appearing
on my docket in motion for sanctions and rescission.
I just wanted permission to speak on that. Go
ahead. So basically with the fair debt collection
practice of that, I sent in a validation of debt
in 15 days, calendar days to get that back. I
never received anything on it, no response whatsoever.
So to me, that's a refusal to validate. They
never validated, but took two post debits afterwards.
They debited me a 62370 on September 9th and
on October 8th. So under the FD, CPA 1692K, that's
a thousand per debit there for the violations.
So I'm asking for that. And then there's no cure.
So to reject the PPA. All right. Thank you. All
right, anyone else wish to be heard in opposition
to confirmation? I know, Mr. Jimenez, I'll come
to you. All right, Mr. Jimenez? Thank you, Your
Honor. Andrew Jimenez for the United States recipe.
Your Honor, before I move forward with my objection,
Um, I would like to just do, uh, a quick question
from nation to Mr. Osherski regarding the tabulation
of votes. Okay. Mr. Osherski, are you available?
Can you turn on your camera? Yes, I'm available.
Uh, just turn on the camera. Okay. Did you raise
your right hand, sir? Yes. Do you found Mr. Osherski's
firm to tell the truth and will truth and nothing
but the truth? Yes, I do. All right, go ahead,
Mr. Jimenez. Thank you, Your Honor. Good morning,
Mr. Urscherski. Can you hear me? Yes, I can hear
you. Good morning. Good morning. Mr. Urscherski,
did you listen a moment ago, a debtors council
informed the court that the debtors receive approximately
543 opt -outs from creditors? Yes, I heard that.
Okay. And you agree with that number? That number
is correct? Yes. Could you tell the court how
many ballots with an opt -out form were sent
out to creditors? Well, there was approximately
8 ,000 ballots that were sent out with the opt
-out box included on a ballot. And I believe
it was referenced in the presentation by Ms.
Rainey. There were also approximately 35. 35
,500 non -voting notices and opt -out forms sent
to non -voting classes as well. I'm sorry. You
said 35 ,000 or 3 ,500? 35 ,000. 35 ,500. I got
you. OK. And of all those, ballots for creditors
and also all those forms, non -voting forms that
were sent out. How many were returned undeliverable?
I'm not sure I don't have that number right now.
Okay, can you tell the court if any of those
ballots and non -voting forms were returned undeliverable?
I can't right now. I'd have to check with my
team. I don't have that information right now.
Do you have a breakdown from the 543 opt -outs
that were received? Do you have a breakdown as
to how many of those were from voting creditors
and how many were from non -voting parties? Yeah,
that information can be found in my declaration.
I don't have the accounts right now, but it can
be discerned from the evidence. Will it help
you if we pull up your declaration to find out?
Sure. Your Honor, if I could have the container
roll. Can you see my screen, Mr. Prachoski? Yes.
OK. Is this big enough, or would you like me
to enlarge the image? This is fine. OK. So where
should we go in your declaration to find out
that information? So the exhibits C1 and C2,
so the last two exhibits of the declaration.
OK. Okay, did you see one? Okay, what would you
like me to go? Should I keep scrolling down?
Yeah, so Mr. Minnis, it's like I guess I don't
have like I don't have the number I guess of
the 543 I'd be estimating if I told you how many
like general unsecured claims I see just based
on like the number of rows included in that page
I would, if I pulled up the Excel exhibits and
not the PDF form, I could get a count of the
number by class. But just looking at the pages,
I'd kind of be guesstimating as to how many,
as you can see from C1, it looks like a majority
of these are, a large majority are from the General
Insurance Claimants, with a handful coming from
the non -voting classes. C2 has public securities
holders that are in classes 3, 5, and 8. And
similarly, I believe that most of the opt -outs
included on this exhibit are from holders in
classes 3 and 5 with a handful also coming from
the holders in class 8. Those are all the questions
I have for you, Mr. Ostrowski. Thank you. Okay.
Thank you. Okay. Thank you, Your Honor. Now let
me just move to summarize the issues that I think
still remain, Your Honor. And I'm going to start
by what I think should be the easiest one, because
I think we had our conversations with the debtor
and to find the appropriate language to address
this issue. So the request is better to include
a language if not in the plan, at least in the
confirmation order regarding preserving the police
and military powers of governmental units and
making sure that the plan, confirmation of the
plan would not discharge claims of governmental
units. And to that effect, I believe that the
debtors incorporated language in the proposed
confirmation order that was filed last night
at Docket 1188. However, in paragraph 117, Your
Honor, I think there is a sentence that I think
pokes a big hole into that provision. Earlier
this morning, I requested the debtor to make
a notification to paragraph 117. I think they
have agreed to that, Your Honor, and to that
extent that they make that notification, then
that issue is resolved. But I just want to make
the court aware that what was filed last night
is still needs a small notification in Paragraph
117. All right, before you go on, Ms. Rainey,
is that, I'm looking at 117 right now, is that
acceptable to the debtor? Yes, Your Honor, it
is. Okay, and which sentence is it, Mr. Jimenez?
So, Your Honor, if you look at 117, if you look
at the second half, when it starts, it reads,
uh, provided that the bankruptcy court retains
jurisdiction to determine whether environmental
liabilities asserted by any governmental unit
or other entity are discharged or whether it's
barred by the plan or related to undocumented
fiscal information orders. Any other order relating
to the debtor or the bankruptcy code? Okay, I
see. And so that X would be taken out? Correct,
Your Honor. Okay. And to be specific... Yes,
the X would be taken out. Okay. Thank you, Your
Honor. Yes, because everyone please mute their
phone. I don't know we're having a problem Conference
muted conference unmuted All right, go ahead
mr. Jimenez, I'm sorry, it's just background
noise. Okay, your honor uh so your honor this
the plan um the amended plan uh has two categories
two different categories of exculpated parties
and i'm going to start with the first one which
is it's it's called 1125e exculpated party so
my objection to that category of 1125e exculpated
parties is that uh It's not narrowly tailored,
Your Honor. It includes related parties. I object
to the inclusion of related parties in that definition
of what otherwise would be the 1125 fiasco -created
party, because those related parties, Your Honor,
are not fully identified. We don't know who they
are. It's a broad definition that would include
a lot of people that we think we don't know who
they are. So my objection is that related parties
should be removed. from that definition of 1125E
exculpated parties. And I want to move on now
to exculpated parties, which is a different category
in the plan. And in the exculpated parties, Your
Honor, our objection is that it includes the
definition of exculpated parties includes the
special committee. Our position is that the inclusion
of the special committee is not authorized under
Highland Capital, Your Honor. And we are requesting
that the special committee be removed from that
definition of escalated pardon. Under Highland
Capital, Your Honor, directors or independent
directors can only receive an escalation under
very specific circumstances that we had in Highland
Capital, which we don't have here, Your Honor.
And I don't think under Fifth Circuit precedent,
the veterans are authorized to give exculpation
to the special committee. Finally, last but not
least, Your Honor, we reiterate our objection
to the upheld mechanism, Your Honor. That objection
has been fully briefed previously, so I'm not
going to take the court's time reciting that
again, Your Honor, but we have concerns about
the party's that will be subject to the third
-party releases giving appropriate consent. Editors'
Council in their arguments stated to the court
that the uptown mechanism was successful because
the debtor received 543 uptowns. I would submit
to the court, Your Honor, that we've only received
a very small number of uptowns out of a very
large universe of and non -voting parties that
are able to participate in the opt -out. Over
8 ,000 ballots for voting predators were sent
out with an opt -out mechanism, and 35 ,500 were
sent to non -voting parties. So we have over
42 ,000 opt -out forms were sent out, Your Honor,
and we only got about... received back 543. That
is a very small number. That is a very small
participation. And I don't think that shows that
the opt -out mechanism is successful or appropriate
in this type of case, Your Honor. I know the
committee has reached a... settlement with the
debtors in our approving the plan, Your Honor.
But if you remember back when we were discussing
the disclosure statement, the conditional approval
of the disclosure statement, the committee raised
the concern that the opt -out mechanism was not
appropriate and that it should have been an opt
-in mechanism. Our objection was a little different,
Your Honor. But I think – I just mentioned it
to illustrate that those concerns about the opt
-out mechanism I think still remain and are still
objectionable at this stage. So that's all I
have for the court this morning, and thank you
for the opportunity and for listening, Your Honor.
Thank you. Good. Okay. Thank you. All right.
If no one else wishes to be heard in opposition,
go ahead, Mr. Reagan. Thank you, Your Honor.
Just to take Mr. Jimenez's comments in turn,
first to the scope of the 1125E exculpated parties
definition, that definition notes that the related
parties are only included to the extent permitted
under Section 1125E of the bankruptcy code. So
I believe that that proviso substantially narrows
the scope of this definition and should be considered
appropriate. As to the Special Committee, I will
rely on my previous statements as to all of the
work that has been done by the Special Committee,
and I believe that similar definitions have been
approved by Your Honor in courts in this district.
As to the scope of the opt -outs, I don't believe
that there is a numerical threshold that's required
to show that opt -outs are consensual. Not only
were opt -outs forms broadly populated to the
voting classes and non -voting classes, but there
was a publication notice filed in the New York
Times, the Financial Times, and the San Juan
Daily News. So, Your Honor, I would submit that
contrary to Mr. Jimenez's assertion, these opt
-outs were indeed consensual. and will be further
bolstered by the supplemental opt -out notices
that will be sent after this hearing if Your
Honor approves it. Thank you so much, Your Honor.
All right. Anyone else wish to be heard? Yes,
Your Honor. Henry Cavane? Yes, Henry Cavane.
Go ahead. Thank you, Your Honor. I just wanted
to follow up on Ms. Rainey's introduction about
the DOE resolution and the concern dealers had.
Just like Mr. Schartz started his presentation
with kind of a timeline of what happened in this
case, there was a similar timeline with respect
to the dealer's concerns about the DOE program
and the dealer's reimbursements under that program.
As you may recall, at various points in the case,
orders were entered and they were all intended
to protect the dealer's rights to reimbursement
at various stages of the case. The debtors agree
to honor their obligations under the program
and fulfill their obligations. Do you want this?
You have to use them. Everyone, please mute your
line. Please. Go ahead, Mr. Gray. I'm sorry.
Everyone, please mute their lines. Thank you.
Go ahead. Thank you, Your Honor. And yet, as
we approach confirmation, my client, Wynmar,
We still owed millions of dollars under the DOE
program on account of many hundreds of completed
projects. And our concern was simply that getting
to this point of confirmation, we just did not
want the debtors to exit stage left without fulfilling
their ongoing obligations to reimburse us. And
we've been working very hard with the Department
of Energy and the debtors and the other dealers
affected by this. to reach a letter agreement
that is between Mr. Alejandro on behalf of the
debtors, the Department of Energy, and the effective
dealers in Puerto Rico, under which the debtors
will continue, notwithstanding confirmation,
notwithstanding the effectiveness of the plan,
to upload the documentation that entitles the
dealers to reimbursements from the DOE program,
the DOE's remittances, Once they're passed down
to the debtor's bank accounts as the recipient
of the award, the debtors have also continued,
they will continue to process those payments
for passing through to the dealers. So we believe
even though we're not quite there, we are hopeful
we'll be able to execute that letter agreement
today. But I wanted to give the court a little
more context. for the DOE resolution, and I thank
you for your time. Thank you. All right. Does
anyone else wish to be heard? All right. So before
me is final approval of the disclosure statement
and the confirmation of the debtor's plan. I
have a few comments, and then I'll issue my ruling.
I have a question, Ms. Rainey, with respect to
the ability to assume or reject executive contract.
And there are, there's a paragraph, the old paragraph
37 and 128 of the confirmation order. I know
it's been amended now again. And so my concern
is the situation where someone supports the plan
thinking that their contract is going to be assumed
and there's no cure dispute and then it's subsequently
rejected. So I understand the situation where
you're seeking to assume there's a cure dispute
and then the cure dispute comes out in a way
that you don't like and you can reject the contract.
But what I don't want is the situation where
you... say you're going to assume there is no
cure dispute, and then you subsequently reject
the contract. So I just want to make clear that
that is not the situation that you're talking
about. Because paragraph 37, the plan says all
executory contracts are going to be rejected
unless there's a pending motion to assume. So
if there's a pending motion to assume and no
cure dispute, then it should be assumed. And
I don't think And if they vote in favor of the
plan, then it should be assumed. Otherwise, I
don't think it's fair or equitable at that point.
So it's just a language change. And I just want
to make sure that there isn't this appears to
be a conflict there, or at least an ambiguity.
Understood, Your Honor. And we can add clarifying
language to that effect. Yeah. OK. In paragraph
131 of the old confirmation order, the provision
regarding revenues under Puerto Rico law, this
is the consumer's rights under Puerto Rican law.
I don't know how the concept, how the opt -out
concept works there. So it says under the old
paragraph 137, You know, that notwithstanding
anything in the order, there are, if any, pre
-petition obligations, regulatory determinations,
administrative enforcements under Puerto Rico
consumer contracts shall not be extinguished
solely to the extent somebody timely opted out.
I don't know what an opt -out has to do with
this. The contracts were sold subject to 365
-0, and whatever the rights are under 365 -0,
those rights are... are maintained, but this
order shouldn't affect the sale order. So I don't
understand how the opt -out mechanism works with
respect to Paragraph 131. Good morning, honor.
Can you hear me? Yes, I can hear you. Great.
Mike Coe, Kirkland & Ellis on behalf of the debtors.
So Paragraph 131 regarding rights and remedies
under Puerto Rico law is a mostly negotiated
resolution of one of the informal pro se objections.
Ms. Barrera had filed a number of pleadings on
the docket. I'm not sure if she's on the call
this morning, but we had communicated back and
forth with her a few times and we had asked her
for some proposed language that would resolve
her objection for the order. This is a resolution
amongst us. We haven't been able to contact Ms.
Barrera since we included this in the order to
confirm that she signed off on it. But it's fairly
close to what she had requested in the first
place. So if there are revisions to the language
that your Honor would prefer we include, we're
happy to do so. I believe the reference to the
opt -out was simply to ensure, number one, that
she was noted as having opted out, and number
two, that it wouldn't interfere with the otherwise
reservation of her rights as she requested. All
right. Yeah. So I would just take out solely
as the holder's claim that family opted out.
party releases and are not releasing parties,
I would just take that out. And the sale order
stands. There was a, you know, the sale order
was a broad release subject to 3650. All right.
Then my last question, well, two others. The,
so in paragraph 32 of the old confirmation order,
The talks about that the purchaser will fund
the purchaser settlement fund Settlement amount
but then paragraph 171 of the confirmation order
talks about purchaser settlement consideration
Is that the same thing? Yes, your honor, okay.
All right, so That's it With respect to the exculpation
of the special directors, I think we should refer
to Mr. Stein and Mr. Horton by name so there's
no confusion. We'll make that revision, Your
Honor. Okay. And then, finally, as it relates
to the extended opt -out, I think it would probably
be more appropriate to extend it for 75 days
past both the end of the government shutdown
as well as the holidays so that if you take it
75 days, it goes to the end of January. I think
with that, I would feel comfortable to the extent
that there were any logistical issues that those
have been resolved. We're happy to extend it,
Your Honor. All right. So first of all, in terms
of my ruling, I'm going to go ahead and grant
final approval of the disclosure statement and
confirm the plan. There are many pending motions
in front of me filed by various individuals relating
to requests to rescind amounts, to rescind contracts,
to Those matters will be handled in the ordinary
course and they're not impacted by this. Part
of the issue, we had a hearing earlier this week
where a consumer was objecting wanting to have
his panels removed and basically the debtor has
sold the business and there's a third party.
who now owns those assets and has the ability
to do that. So part of this is an issue of what
relief I can grant. As long as that's not before
me today, I'm not ruling on anything relating
to the various motions that are in front of me.
I'm really focused on the disclosure statement
and the plan. And I do agree with Mr. Schartz.
I often wondered... You know what road this case
was going to take especially at the start but
and I'm happy that we were able to Delay the
confirmation hearing and end up with you know,
substantially a substantial agreement among the
parties as it relates to the remaining Objection
by the US trustee number one There's always a
question as to if ballots are returned undeliverable,
what the effect of that is. And I'm not ruling
on that today. To the extent somebody did not
receive notice in a constitutional fashion, that
matter isn't before me, and I'm not making a
ruling with respect to that. As it relates to
the scope of the 1125 -E exculpation. There's
two responses. One, Ms. Raney indicated that
it's only to the extent permitted by 1125 -E.
And also the related party's definition is limited
to anybody who would be liable in a derivative
capacity through or liable as a result of the
actions taken by the by the party that is named.
So the related party is only liable if that party
is there liable because of the actions taken
by the other person. So in that sense, I think
that the 1125E exclamation was appropriate. As
it relates to the exclamation of the two independent
directors, I do believe that they were acting
in a fiduciary capacity. I think that under Highland
Capital to the extent that a person is acting
in an independent capacity that came in, performed
a significant function in this case, and acted
as a fiduciary, especially in light of the fact
that, you know, the debtor's management went
with the purchaser. I think that they, with respect
to the limited time period that's covered by
I think that those are appropriate. So on that
basis, I'm going to overrule the trustee's objection.
Finally, as it relates to the opt -out mechanism,
I think that under the Fifth Circuit law, prior
to Purdue, there was no thing as a non -consensual
release. Here, you have a situation where The
release is limited. It's been highly negotiated.
There are various carve -outs. The better release
is, again, limited to a very narrow period of
time, you know, relating to the period after
the confirmation. I'm sorry, after the petition,
but prior to the effective date. I think the
scope in there is appropriately limited. And
I do believe that under the circumstances and
the fact that you did have, you know, 543 people
opt out and the extended opt -out period for
75 days until January 26th, I think all of those
measures indicate that the release was consensual,
is consensual. and under Fifth Circuit case law
is appropriate under the circumstances. This
isn't a case where you're trying to get something
by people. I mean, this has been highly negotiated.
This is probably one of the more extensive release
with various cutouts and different parties getting
different things. And furthermore, the scope
of what's not being released is significant and
forms the basis of the committee resolution with
the debtor. So under all of those circumstances,
again, I'm going to overrule the trustee's objection
with respect to the opt out mechanism for the
third party release. And so with that, I think
that I have... I've ruled on everything. Is there
anything that I haven't ruled on? I think we're
good, Your Honor. Thank you so much. OK. All
right. I also had on the docket for today a motion
to quash a 2004 examination. Is that still on
the docket or wasn't on the agenda? All right.
Mr. Sharpe, that was your motion, but we'll not
worry about that. Is Mr. Shriver in the room
in New York? To me, that was something you were
dealing with. We can... Mr. Cone just popped
on. Whenever you want to have that, if that's
still viable and you want to have it heard, just
reach out to Mr. Lodge. Okay. All right. Okay.
So, Mr. Ortega, you raise your hand. Yes, your
honor. It's been your take associate credit claim
1473. I just want to confirm. So you're saying
as far as the motion for sanctions and the stuff
that I applied will be rolled on later. So I'll
schedule a hearing and it will be ruled on at
the time of the hearing. Okay, sir. I appreciate
it. Thank you. No problem. Your honor. All right.
If I could just one final matter. Yes, we have
We have an extensivity motion that hasn't been
granted yet. I think with today's rulings, we
can officially say there won't be any opposition
to it. And so with Your Honor's leave, we'll
file a CNO on that motion following this hearing,
and hopefully get that order entered. Right.
OK. And also, with respect to the 14 -day stay,
that's why I knew I was missing something. With
respect to the 14 -day stay, I think in this
case where You know, it did work with administrative
insolvency. I think the quicker that you can
stop the drain, the better. So I'm going to go
ahead and wait to say I think that based on the
evidence that was presented from the declarations
of Mr. Alejandro, I think there's sufficient
evidentiary basis in order to do that. Thank
you. All right. All right, Mr. Esquivel. Mr.
Esquivel. Thank you, Your Honor. Can you hear
me? Yes, I can hear you. So in my case, you mentioned
you're going to be ruling in a later date for
those motions pending. You just want to make
sure that if the client goes effective, those,
you know, So if the plan goes effective, those
issues where consumer cases in our contract are
not going to leave us in a kind of unprotected.
So that is going to make sure the fact that you
rule today on the plan doesn't affect all of
the consumers. The plan grants certain relief
to the debtor in order to do that. There is no
discharge in the plan. And with respect to this
paragraph 131, it says, basically, notwithstanding
anything to the contrary in the plan, any preposition
obligations, regulatory determinations, or administrative
enforcement relating to Puerto Rico consumer
contracts shall not be extinguished or impaired
or released. That's what he said. Thank you,
Mr. Your Honor. So I'm located in New Jersey.
I'm not sure if this is only... related to Puerto
Rico in this case. So, yeah, so the order and
perhaps the order, the sale order reserved all
of the 365 old rights, which were the consumer
rights under the consumer contracts. Whether,
in your case, that's the case, I don't know.
That's why I want to study it and read it out
separately. without, you know, making a decision.
Thank you so much. Appreciate it. Okay. Sorry,
Mr. Sharps, anything further? Oh, Your Honor,
thank you so much for your time. It's been a
long road and we appreciate it. Okay, so go ahead
and just resubmit the confirmation order with
a red line. and as well as the C &O on the other
order, on the exclusivity extension, and I'll
review that and get that entered. All right.
So we'll be in recess until the 9, 10, 30. Thank
you all.